INSURERS: A CASE FOR ACTING ETHICALLY TOO
or many people, the fracas over Momentum initially refusing to pay out a life policy for a man who was brutally murdered, on the grounds that he had undisclosed high blood sugar, will fuel their worst prejudices about insurance companies. Depressingly, it also reveals a tin ear in some of SA’S largest firms for prevailing public sentiment towards many consumer-facing firms, and scepticsm over the legitimacy of big business.
A favourite trick of insurers is known as “underwriting at claims stage”. Only once a death or disability claim has been lodged does the insurer launch a full investigation into the client’s medical history, and it can then repudiate the claim.
Had it done routine tests in 2014, Momentum Life would never have given the hijack victim, Nathan Ganas, a policy. And it surely should have drawn blood for a R2.4m policy — a material amount of money. Had it done so, it would have easily seen the high blood sugar, an indicator of the onset of diabetes. But what has rankled with many is that Ganas’s sugar levels made no difference to his premature death at the age of 42, from gunfire, in his driveway in Durban. He died protecting his wife, Denise, from hijackers.
While Momentum counters that most people just don’t understand how insurers work, it’s a terrible response: if you’re taking premiums, you ought to ensure the rules of the game are well understood by your customers.
To an actuary, the case might seem cut and dried. If the client lied on his application form, he would not be entitled to a payout.
But that won’t wash as an excuse for Momentum, making a mockery of its claim to be clientcentric. In public, the company has flailed — poor Johann le Roux, the head of Momentum Life, seems out of his depth. “Though we are doing the right thing, it is apparent that the public at large are not as informed as we hoped,” said Le Roux.
FBut if the public isn’t informed, Momentum has only itself to blame. It looks entirely cynical to suck out premiums from the public, only to seek a pretext to refuse a claim later. To non-actuaries, it seems illogical and unethical to refuse to pay out for a violent death on the grounds of a health condition that had nothing to do with that cause of death.
As former public protector Thuli Madonsela put it, Momentum’s response was “perfectly legal”, but “is it just and ethical?”
This fallout highlights the expectation gap between the corporate sector and society. Life insurance is taken out for an unexpected event and reputable insurers take pride in being there when they are needed. Momentum looks to have done the opposite, making a drama out of a crisis.
Mercifully for Momentum, the case has been an exception. But the reputational impact should not be underestimated. Many clients have already ditched the insurer in disgust, and others will surely follow.
Late on Tuesday, Momentum CEO Hillie Meyer said his company wold pay the R2.4m to Ganas’s widow. He also said Momentum had changed its rules to guarantee the full death benefit “in the case of violent crime‚ regardless of previous medical history”. It was a smart move, even if it was sparked by the furious public reaction. But Momentum will struggle to remove this sour taste from the mouths of many potential customers.
Now, the rest of the industry should follow Momentum’s lead on rewriting the rules to better reflect the reasonable expectations of customers.
South Africans rightly expect better of their blue-chip companies. When a company like Momentum acts in a way that seems cynical and unreasonable, it weakens the bond between business and society — a bond already straining under a slew of revelations of unethical behaviour.